Edmonton’s proposed pot shop fees raise concerns for smaller startups

Edmonton’s proposed licence and permit fees for marijuana stores could make it harder for small operators to get started, an executive with a cannabis retailer says.

City staff have recommended charging pot shops $2,500 for business licences for shops, cultivation and processing facilities, and a further $5,600 for development permits, or about 15 times higher than the $512 total levied on similar establishments.

While a city report estimates the actual cost of providing these services, including police, is $148,000, it concludes charging that much would go beyond what other businesses pay and lead to a stronger likelihood of legal challenges.

Nick Kuzyk, chief strategy officer at High Tide Ventures Inc., said Saturday the suggested $8,100 in total fees seems reasonable to help cover the extra staffing and other expenses municipalities are incurring to deal with the new recreational pot industry.

However, Kuzyk — whose Calgary-based company has so far applied to open 25 stores across Alberta, including several in Edmonton — isn’t sure what impact such an expense would have on firms that want to set up a limited number of outlets.

“It may make it difficult for mom-and-pops and the people the province wants to participate in the industry. I sure hope not. They should have a fair chance to participate at this level,” he said.

“Hopefully, fees at this level don’t stop that from happening.”

This expense won’t be an obstacle for High Tide, which already runs 19 Smoker’s Corner cannabis accessory shops, and with recreational marijuana scheduled to be legalized this year many other groups are keen to enter the field, Kuzyk said.

“There’s a lot of demand for prime real estate and landlords are charging premium rents for those locations.”

The fee report will be discussed Tuesday by city council’s urban planning committee. Coun. Michael Walters, a committee member, said there are two sides to the issue.

“We need some degree of cost recovery until we know what we’re going to receive from the province to deal with increased costs associated with marijuana … We’re a bit in the dark right now,” he said, adding property taxpayers shouldn’t have to carry the whole burden.

“(But) one of our principles when we think about the regulation of cannabis is being business friendly. We want to make people feel they can make it work here without too much red tape.”

Tight timelines mean there hasn’t been broad public consultation about the fees, which officials originally suggested should be lower, but Walters expects they’ll hear from retailers at the meeting.

“I’m well aware that the higher our fees are, the more contradiction there is with our (business friendly) principle, but the challenge we have is we don’t know how much it will cost us down the road.”